4 Belangrijke Zaken om te Weten over Vermogenswinstbelasting in Cyprus

Understanding the intricacies of capital gains tax (CGT) in Cyprus, particularly in relation to income tax, is pivotal for individuals and entities engaging in property transactions or holding shares in companies with immovable properties within Cyprus. This guide aims to clarify Cyprus’ CGT regulations, covering calculations, deductions, lifetime allowances, exemptions, and the expertise our law firm offers in this domain.

Berekening van Belastbare Winst

When selling an immovable property in Cyprus or selling shares in companies holding such property, Capital Gains Tax in Cyprus is imposed at a rate of 20% on the profit (subject to double taxation provisions) regardless of the tax residence of a company or an individual. The tax is applicable to gains from disposals of immovable property situated in Cyprus.

The taxable gain is calculated by deducting the original purchase price, adjusted for inflation, from the current selling price. This calculation also includes any post-purchase renovation expenses, along with additional expenses as explained below.

The total cost of the immovable property should be adjusted to include the increase in value from its purchase date, which must be on or after 01/01/1980, using the Cyprus consumer price index.

Example:

• Selling price of the property (on 01/04/2024): €400,000
• Cost of purchasing the property (on 01/01/2000): €250,000
• Less inflation (01/01/2000 – 01/04/2024): €250,000 x (251.17/167.89) = €374,009.75
• Taxable profit: €400,000 – €374,009.75 = €25,990.25

Aftrekken

There are various deductions available, that may reduce or eliminate the tax liability for such immovable property:

• The amount an individual paid to the Land Registry for the transfer fees (to get the deed transferred into their name);
• Extras or additional works done to the property may be taken into consideration by the Tax Department, provided that proper invoices and receipts are submitted. Acceptable extras include structural or permanent alterations, such as a swimming pool, garage/car port, or central heating, provided that these have the correct permissions. However, decorative works (such as painting) or costs for furnishing the property are not accepted by the Tax Department.
• Commission paid to a registered estate agent in Cyprus. Any amount paid to a non-registered estate agent for marketing fees or otherwise is not CGT deductible;
• Legal fees paid to the legal representative.

Levenslange Toelagen

Currently, there are three lifetime exemptions subject to an overall maximum limit which can be deducted from the taxable capital gains. It is important to note that an individual is entitled to the allowance only for his first sale of property, but if he has previously sold property in Cyprus but has not used up all of his allowance the balance of the allowance carries over onto the next sale. Here is a breakdown of the three main allowances:

1. Eerste toelage: Elke persoon heeft recht op een persoonlijke belastingvrije toelage van €30,000 voor de verkoop van een onroerend goed. In gevallen van gezamenlijke eigendom, geldt deze toelage voor elke eigenaar afzonderlijk.

   Example:

   • Taxable profit (1 owner): €25,990.25 – €30,000 x 20% = €0
   • Taxable profit (2 owners): €25,990.25 – €60,000 x 20% = 0

2. Tweede toelage: De €30,000 toelage kan stijgen tot €150,000 als kan worden bewezen dat het onroerend goed de privé hoofdverblijfplaats van de persoon is geweest gedurende ten minste de afgelopen 5 jaar. Substantieel bewijs moet aan de Belastingdienst worden overlegd ter ondersteuning van deze claim.

   Example:

   • Taxable profit: €25,990.25 – €150,000 x 20% = Geen winst
   In gevallen waarin een persoon in aanmerking komt voor de maximale toelage van €150,000 maar het onroerend goed samen met anderen bezit, is het essentieel om deze toelage te verdelen naar de respectieve aandelen die door elke partij worden bezeten.

3. Derde toelage: Boeren die hun landbouwgrond verkopen, hebben recht op een persoonlijke belastingvrije toelage van €50,000. Deze toelage kan worden afgetrokken van de belastbare meerwaarde die verband houdt met de verkoop.

Vrijstellingen

The following dispositions of immovable property are exempt from capital gains tax in Cyprus:

1. Transfer due to death (inheritance succession);
2. Gift and/or donation between relatives up to third degree kindship;
3. Gift and/or donation to a company where the company’s shareholders are members of the donor’s family, and the shareholders continue to be members of the family for five years after the day of the transfer;
4. Gift and/or donation from a family company to its shareholders if the company had acquired the object of the gift also by way of a gift, subject to conditions;
5. Gift and/or donation to charitable institutions or to the Republic or to a political party;
6. Transfer of immovable property between persons who have dissolved their marriage;
7. Transfer due to loan restructuring (under certain conditions);
8. Transfer in the event of reorganization of companies; and
9. Expropriations.

Additionally, shares listed on a recognised stock exchange are exempt from capital gains tax.

Conclusie

In conclusie, ons advocatenkantoor biedt uitgebreide expertise in het navigeren van Vermogenswinstbelasting in Cyprus, met persoonlijke begeleiding om cliënten te helpen hun financiële resultaten te maximaliseren. Van het berekenen van belastbare winsten tot het benutten van beschikbare vrijstellingen en toelagen, ons team is toegewijd aan het waarborgen dat cliënten hun CGT-verplichtingen minimaliseren terwijl ze volledig voldoen aan de wettelijke vereisten.

OOK LEZEN

• CYPRUS TAX RESIDENCY FOR INDIVIDUALS AND NON-DOMICILED STATUS
• A SIMPLE GUIDE FOR REGISTERING A BUSINESS IN CYPRUS
• GAIN VALUABLE INSIGHTS ON THE CYPRUS TAX REGIME